When a realtor list a short sale property,he decide the price to be listed base on the properties that sold in the last few months.The short sale price listing is normaly 20% lower than the bank own properties.the process of short sale is way much longer than a bank own property and once the property is in escrow the bank usually do another BPO and if they find out that they are loosing more money,then,they change the price.The bank wants to minimize the lost and sometimes they rather go for foreclosure than short sale.
the price adjustment is common at this market with short sale properties.

The banks base their opinions for approving a short sale on a BPO (broker price opinion). The bank has several real estate agents, not involved with the transaction, give their market analysis of the home using an accepted universal evaluation form. The bank uses these evaluations as their guide to determine if the contract price is "fair" compared to the other professional opinions. Each bank has a formula they use to determine how much variation they will allow from the BPO. Some want the contract to be within 8% or 9% and others will allow up to 30% or more...depending on the area of the home and the local market trends. All the bank is doing is to lessen their losses. They want to determine which is going to be the greater cost to them: let the home go to foreclosure or short sale it. When the independant BPO's indicate the value to be significantly higher than the contract, that is when you see the banks asking for more money.

The bank does not normally set the price of the home the seller does based on advice from their Realtor®. Some Realtors® set a listing price on the home in order to get multiple offers and hope to close one of the! The repercussions on that are if the buyer do not qualify for the higher price that the lender agrees to release the home at a lot of time is wasted and you have a lot of unhappy buyers.

There was a home in my area that was priced at 100,000.00 in a 300,000.00 neighborhood. It went pending for 90 days.. It fell through and when it came back on the price was changed to 250,000.00 "preapproved" short sale.

The list price is set by the seller based on the market evaluation given to them by their listing agent. The bank (seller's lender) must then "approve" the short payoff as payment in full. Sometimes the amount that the bank will actually accept as a short payoff will be above what the property will appraise for. This is also complicated when there is more than one lien holder on the home. We are seeing this more and more.

Hi Peggy,

With regard to Short Sale homes; It is the Agent and the Owner that set the market price. Typically after they receive an offer, they submit the offer to the bank (Beneficiary) for approval. The bank has the right to decline the offer or begin negotiations.

I hope this help to answer your question and let us know if you have any more.

Best regards,

"Rocky" G.H. Hawrysz, Realtor®, Broker Associate, e-PRO®, ABR®, SRES®
Prudential California Realty
(209) 444-6610 - Direct Office Line
Web Site: http://www.TeamHawrysz.com
Lic.: 01468373